Nikkei At The Crossroads: Something Has To Give

Nikkei at the crossroads

Japan has spent the past month consolidating, but beneath the surface positioning has been shifting fast. Hedge funds have de-grossed, the crowded Tech long has been cut aggressively and retail has taken some profits, yet overall exposure remains historically elevated.

With Nikkei approaching the 100-day again and CTA downside triggers getting closer, the compression is becoming increasingly interesting. Positioning has been cleaned up, but remains elevated, while the divergence versus Korea keeps widening. The next break could be a big one.